Why Agri-Equipment Companies Should Watch Telangana

On November 6, the Telangana government said it would provide 24×7 power to the farm sector for the “next five to six days”. It was part of a bigger plan. It is seeing this as a dry run to its eventual objective of providing 24 x7 power to farmers, beginning March 2018.

If that happens, and if farmers plug more into the greater supply, it could open up new opportunities for companies in the business of agri-equipment like pump-sets and drip irrigation sets.

Power availability is an issue in India everywhere, especially in rural areas. The last time an exhaustive count of power availability was done at the village level was as part of Census 2011. This was when the 10 districts that are Telangana today were a part of Andhra Pradesh.

In October 2016, these 10 districts were re-carved into 31 districts, but to stay synchronous with the data, this piece will consider them as 10 districts.

Villages in these 10 districts received 5-7 hours of electricity for agricultural use in the summer months of April to September (See Graph 1). The situation would have improved since then.

In fact, in the six-month period to September 2017 alone, Telangana increased power generation by 25%, which was the highest among all large- and medium-sized states, shows data from the Central Electricity Authority.

Villages and farmers need this incremental electricity. According to the Socio Economic Caste Census of 2011, 8 of 10 districts in Telangana each had at least one-third of agricultural land that was unirrigated, led by Adilabad (55%). This means produce on this land is largely dependent on rains. If there is greater surety of power supply, those with the means to buy, or the ability to borrow to buy, might be more inclined to invest in agricultural equipment that enable better productivity through greater mechanization and irrigation.

So, where in Telangana might these pockets of demand be? Here’s what the rural areas of these districts looked like in 2011 on five metrics that define ownership of agri-equipment and purchasing power. And there resides lines of inquiry for chief marketing officers (CMOs) of agri-equipment companies.